MADURA COATS LTD Vs. STATE OF KERALA

JUDGEMENT

(1.) These Tax Revision Gases are by the Madura Coats Limited, Koratti, a public limited company. The assessment years are 196970, 197071, 197172 and 197273. The orders for the first three assessment years are by way of reopening the assessment; and in the last assessment year, the order is one of original assessment. The Assessee Company receives yarns from Messrs. Madura Mills Company Ltd. The yarn supplied is wound round cones. The cones are passed on to the Assessee Company. (We are purposely using the expression 'passed on' and avoiding the expression 'sold' at this stage). At the time the cones are passed on a debit note is made by the Madura Mills Company; and at the time of return of the cones a credit note is made. These notes are with respect to the cost of the cones. The relevant terms of the contract between the Assessee and the Madura Mills Ltd., are as follows

(2.) In these revision cases the question pointedly arises with respect to the return of the cones by the assessee to the Madura Mills Ltd. Counsel for the revision petitioner relied on clauses 4 and 7 and argued that there was an obligation to return the cones and that the sale price is worked out only on the actual content of the yarn, without taking into account the value of the cones. No doubt clauses 4 and 7 are to this effect. But, as pointed out by the learned Government Pleader, clause 6 seems unmistakably to indicate that the cost of the cones will be given credit to 'as and when' they are returned. As the learned Government Pleader contended, these expressions seem to negative any positive and binding obligation on the part of the assessee to return the cones. On the other hand, they seem to indicate that when the cones arc returned credit will be given for their cost. We are also struck by the admitted fact that the debit note and a credit note are issued at the time when the cones are passed on and when they are returned. We agree with the learned Government Pleader that this circumstance also affords strong indication that the property in the cones passed on to the assessee and repassed to the Madura Mills Company at the time when the cones are returned. In this view, the conclusion of the Appellate Tribunal is correct and we see no ground for interference in this revision.

(3.) The decision in Dyer Meakin Breweries' case 1972 (29) STC 69 , on which Counsel for the assessee relied has no application. Thereon the facts, the transaction with respect to the bottles was held to be only a deposit and not a sale. There are no grounds to hold so in this case.